Risk of Working without Written Contract

Fortunately, when we started our house construction, we had a written contract with our Building Construction contractor. But we ignored all other contractors thinking other contractors will have less work, and we never made a written agreement with other contractors.

That’s a Big mistake we did.

We never had a single issue with our building contractor. We mentioned all the stuff covered under that contract and at what price he will do. Each and everything is in writing, and we both signed the agreement and then started our house construction.

When other contractors started work, later, they started telling. No, this is not agreed, not in our scope, this is not the price we discussed, no we never said like that, the price increased because of extra work done which is out of our scope, for this quality price is different, etc., stuff started coming from contractors who don’t have written agreement.

No matter how good contractors are, make sure you had a written contract with them. Never make a verbal agreement. No matter what.

Please make sure you mention price, work scope, quality, deadlines, etc.; everything you discuss make sure it’s in written format. People quickly forgot what they discuss, but in the written document, it stays. You can always show them what they agreed upon if they try to deviate.

A written contract is safe for both parties. No matter if they are your friend or some of your close friend referrals.

Here the Two Live Examples of Working without a Contract:

Example 1: Our Story

As you might know, we have done a written agreement with our building contractor and never did any written agreement with other contractors.

We still never had a significant issue with other contractors but started having a severe problem with the Electrical contractor.

This electrical contractor is referred by one of our dad’s close friends (who helped in our house construction) brother, and he doesn’t know much about work.

When we started questioning his work’s quality, he began changing slowly and started telling no this is not in our scope. Although we discussed this in his work scope and he agreed as well in front of my dad’s friend, but later both changed!

When discussing with our electrical contractor, he asked us to show the proof and asked us do you have any written agreement! Which we didn’t have.

Finally, we paid our bills for not having a written agreement with this electrical contractor.

Our Cost:

1) Lost dad friendship with the electrical contractor brother (because the electrical contractor and dad’s friend both are brothers)
2) I guess we paid extra ₹15,000 to ₹30,000 on the agreed amount
3) We got less work than the agreed work scope
4) We had a few verbal fights

Few Lesson we learned while dealing with this electrical contractor:

1) Make sure to have written communication
2) Never do business with friends and relationship
3) Make sure you check previous work history before you hire
4) Keep all possible communication records (ex: phone call records, voice records of important discussions, etc.)

Example 2: Our Relative Building Contractor Story in Bangalore

This is not our story, but our Relative, who started constructing his houses in Bangalore after our house construction. They casually asked for some tips and guides regarding house construction, and my dad and I gave 30 minutes of general advice.

In their case, they are giving building construction with a material contract to the building contractor itself. This means the builder takes the care of building materials instead of the owner.

We advised them to have a clear written agreement. But our Relative ignored saying the building contractor is a close friend of his boss, so he will listen to what his boss says.

Everything was going well until granite laying time came. That time building contractor started telling an extra price for this service! They said this is not included in the contract, so the owner must pay for granite laying.

After listing this, our Relative called us and discussed the pricing we paid for granite laying and told this story to us.

Cost to our relative:

We are not sure how much it cost extra for them. I guess it could be easily around ₹30,000 to a few lakhs, based on how much they paid for granite laying service they charged extra.

Got the importance of having a written agreement?

That’s how much you can potentially save just by having a written agreement during your house construction process.

If you have any questions or have any story to share, please share it in the below comment section.

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